MACROECONOMICS FORMULA SHEET
Total income (or GDP)
Money supply
Velocity of money =
S=Y–C
AE = C + I + G + Xn
MV = PQ
In = Ig – depreciation
Nominal GDP = Q X P or M x V
P=
MV
Q
Real GDP per capita
Xn = X – IM
Ig = In + depreciation
Q=
=
MV
P
money velocity(MV) = money(M) X velocity(V)
PQ
V
M=
V=
PQ
M
Real GDP
population
Real GDP current year – real GDP previous year
Real GDP previous year
Labor productivity = Output per period
Units of labor
Growth of nominal GDP = GDP current year – GDP previous year X 100
GDP previous year
Labor force
Labor force participation rate =
X 100
Working –age population
Economic growth rate =
Unemployment rate =
Number of unemployed
Labour force
X 100
X 100
GDP Gap = Potential GDP – Actual GDP(real or nominal)
GDP Gap = 2.5 X cyclical unemployment X actual GDP (real or nominal)
CPI =
Cost of basket in a given year
Cost of basket in base year
X 100
(price index this year – price index last year)
X 100
Price index last year
Nominal GDP
GDP Deflator =
X 100
Real GDP
GDP Deflator
Nominal GDP = Real GDP X
100
Real GDP = Nominal GDP
X 100
GDP Deflator
Real Value (in year B$) = Nominal value in year A X 100
Price index in year A
70
The Rule of 70: Number of years to double =
% growth rate
Inflation rate =
NDI = GDI – Depreciation – Indirect Taxes
NNI = NDI +/- net foreign factor income
Nominal interest rate = real interest rate + interest rate
Real interest rate = nominal interest rate – the inflation rate
% change in real income = % change in nominal income – inflation rate
Real wage =
Nominal wage
Price level
Total spending(aggregate expenditures) = autonomous spending + induced spending
∆ consumption
∆ income
Marginal propensity to consume (MPC) =
Total consumption = autonomous consumption + induced consumption
∆ saving
MPC + MPS = 1 (closed, private economy)
∆ income
Marginal propensity to expend (MPE) = ∆ aggregate expenditures
∆ income
Marginal propensity to save (MPS) =
Marginal propensity to expend (MPE) = MPC - MPM
Marginal leakage rate (MLR) =
∆ total leakages
∆ income
Marginal leakage rate (MLR) = (1-MPE) or MPS + MTR + MPM
∆ income
∆ autonomous expenditures
1
1
Multiplier =
or
(1-MPE)
MLR
Multiplier =
Marginal tax rate (MTR) =
1
MLR
Disposable income (YD) = national income (Y) - tax (T)
Marginal propensity to import (MPM) =
∆ imports(IM)
∆ income (Y)
Marginal propensity to expend (MPE) = MPC – MPM
NTR = tax revenue – transfer payments
Value of money =
Budget Balance = NTR – G
1
Price level
Target reserves = target reserves ratio X demand deposits
Money multiplier =
1
Target reserves
ratio
Rate of return(rate of interest) =
or
Excess reserves = actual reserves – target reserves
∆ deposits
∆ reserves
Coupon interest +/- change in the bond price
Price paid for bond
365
F(face value) – P (price)
X #days to maturity
P
Ave price of exports
Terms of trade =
X 100
Ave price of imports
Q
1
1 Canadian Dollar
=
foreign currency (in Canadian dollars)
(in units of foreign currency)
r=
X 100
1
1 unit of foreign currency =
Canadian dollars (in foreign currency)
(in Canadian Dollar)
Real exchange rate =
Price level in Canada
Price level in other country
Q
X nominal exchange rate